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MySpace could go for as little as $20 million

/ Source: news services

MySpace, the social media pioneer that once was among the most popular sites on the Internet, could be sold this week for as little as $20 million, the website All Things Digital reported Tuesday.

News Corp., which paid $580 million for the property in 2005, is likely to lay off half the company's remaining staff of 500 people before the deal is completed, according to The Associated Press.

The deal is likely to be done by Thursday, when News Corp.'s fiscal year ends, according to the published reports. The leading bidders, who reportedly are offering $20 million to $30 million, were identified as Specific Media and Golden Gate Capital, relatively unknown companies that have not been mentioned in previous reports. Reuters reported the sale price would likely be "less than $100 million" in cash and stock.

The sale marks a stunning reversal for News Corp., the global media conglomerate headed by Rupert Murdoch that snapped up MySpace when social networking was in its infancy. Although the site was once the to-go place on the Internet for young people, especially for music and entertainment, it has long since been surpassed by Facebook, Twitter and mainstream websites that have added social media features.

MySpace unveiled an extensive overhaul in October in an attempt to transform itself into a hub for consuming entertainment content, then cut nearly half its staff, or about 500 people, in January.

The site still bled red ink, and for the three months through March, the News Corp. segment housing MySpace lost $165 million, worse than the $150 million loss it posted a year earlier.

Specific Media is a new media company based in Irvine, Calif., that focuses on making "addressable advertising a reality," according to its website. Golden Gate Capital is a private equity firm based in San Francisco that is "very comfortable investing in distressed or bankruptcy situations. Neither company was willing to comment on the potential deal.

Until last week, MySpace was mainly in talks with an investment group named Activision, but due to "transactional and legal complexities that made it less attractive" News Corp. sought out other buyers, All Things Digital reported.

Dan Primack of Fortune speculates Specific Media could view MySpace as an add-on acquision and Golden Gate may be interested in using MySpace as a platform it could build on.